Island Heights & Seaside Park Bridge Co. v. Brooks & Brooks Corp.

• Decision Date: 08 March 1916
• Docket Number: No. 156.,156.
• Court: New Jersey Supreme Court
• Parties: ISLAND HEIGHTS & SEASIDE PARK BRIDGE CO. v. BROOKS & BROOKS CORP.

97 A. 267

88 N.J.Law 613

ISLAND HEIGHTS & SEASIDE PARK BRIDGE CO.

v. BROOKS & BROOKS CORP.

No. 156.

Court of Errors and Appeals of New Jersey.

March 8, 1916.

Appeal from Supreme Court.

Action by the Island Heights & Seaside Park Bridge Company against Brooks & Brooks Corporation. From a judgment for defendant, plaintiff appeals. Reversed and remanded.

Charles De F. Besore, of Camden (Berry & Riggins, of Camden, on the brief), for appellant. McDermott & Enright, of Jersey City, for appellee.

GUMMERE, C. J. The action in the present case was brought on a contract of subscription to stock in the plaintiff company, a New Jersey corporation, made by the defendant company, a corporation of the state of New York authorized to do business in this' state. The complaint averred that the plaintiff is a bridge company organized under the bridge act of this state (chapter 385 of the Laws of 1912) for the purpose of building a bridge from Seaside Park, N. J., to Island Heights, in the same state, and that the defendant is engaged in developing and selling a tract of land at the latter place; that the defendant is a corporation created by, and organized under, the laws of the state of New York, and under those laws has power to subscribe to the stock of the plaintiff company; that in the exercise of that power the defendant entered into a written agreement for the purchase of ten shares of the capital stock of the plaintiff company of the par value of $50 each; that this agreement was duly executed by the defendant, and was accepted by the plaintiff, and in pursuance thereof, and in accordance with the conditions of the said agreement, the plaintiff called upon the defendant to pay certain installments of the purchase money for such shares, but that defendant refused to honor said call, and pay the amount due upon its subscription. A copy of the complaint having been served upon the defendant, it thereupon moved to strike out the pleading upon the ground that the agreement was in violation of chapter 18 of the Laws of 1013. Argument having been heard upon the motion, and the court being of opinion that the contention of the defendant was well founded, it ordered the complaint to be stricken out and judgment entered in favor of the defendant From that judgment, the plaintiff appeals.

Chapter 18 of the Laws of 1913 (P. L. p. 32) is an amendment of the fifty-first section of our General Corporation Act The provision of the amendment is that:

"No corporation heretofore organized, or hereafter to be organized under the provisions of the act to which this is an amendment, or the amendments thereof or supplements thereto, * * * shall hereafter purchase, hold, sell, assign, transfer, mortgage, pledge, or otherwise dispose of the shares of the corporate stock of any other corporation or corporations of this or any other state."

This restriction upon the corporate power is subject to certain provisos which are not material in the determination of the question to be discussed, and they are therefore not specified. In determining the scope of the statutory provision just recited it is to be remembered that a very large number of the corporations of this state are created by, and organized under, laws other than that known as the General Corporation Act. Many of them are created by special charter, more of them are organized under general laws, such as the General Railroad Law, the general law for the creation and organization of street railroad companies, the general law for the organization of gas companies, the general law for the organization of telegraph and telephone companies, and other general laws...